Bank of Israel: Haredi draft bill won’t recruit enough troops to relieve reserve duty’s burden on economy

The Bank of Israel says the Haredi draft exemption law being advanced in the Knesset will not result in enough soldiers enlisting to cover the country’s security needs or reduce the economic costs of reserve duty.

Weighing in on the debate, the bank states the economic cost resulting from a reservist leaving his day job for a month and performing his military duties is approximately NIS 38,000, reflecting the “immediate cost of lost productivity” and “future harm to productivity growth as a result of loss of experience and/or promotion at work.”

“In contrast, the economic cost of recruiting a young Haredi for compulsory service is very low, because in most cases conscription does not replace participation in the labor market,” the bank says, adding that conscription itself may push ultra-Orthodox citizens to join the labor market.

“Accordingly, conscripting a young Haredi for 32 months of service could even achieve a capitalized economic benefit estimated at 22,000 NIS per month of service on average, if, as a result, the scope of employment of the young Haredi who enlists is comparable to that of a non-Haredi Jew,” it says.

The bank says the recruitment of 20,000 Haredim — an annual recruitment of 7,500 for 34 months — would eventually reduce the annual economic cost of reserve duty by at least NIS 9 billion.

The current “wording of the law is deficient in a way that will not result in the recruitment of Haredim that meets security needs while reducing economic costs,” the central bank says.